SCC Chemicals Corporation v. Court of Appeals
REITERATIONFacts
The Antecedents: SCC Chemicals Corporation (SCC), through its chairman Danilo Arrieta and vice president Pablito Bermundo, obtained a loan from State Investment House Inc. (SIHI) for P129,824.48, with a 30% annual interest rate and a 2% monthly penalty. Danilo Arrieta and Leopoldo Halili executed a Comprehensive Surety Agreement, binding themselves jointly and severally to pay the loan by January 12, 1984. SCC failed to pay the loan upon maturity, and despite demand letters, no payment was made. Procedural History: SIHI filed a civil case for a sum of money with a prayer for preliminary attachment against SCC, Arrieta, and Halili. SCC asserted a lack of cause of action, claiming the promissory note was null and void for lack of consideration. At pre-trial, the parties stipulated jurisdiction, capacity to sue and be sued, receipt of a demand letter and statement of account, and the execution of the promissory note. SCC repeatedly failed to appear for scheduled hearings, leading the trial court to declare it waived its right to cross-examine SIHI's witness and submit the case for decision. The Regional Trial Court ruled in favor of SIHI, ordering the defendants to pay the principal amount with interest and attorney's fees. The Court of Appeals affirmed the RTC decision in toto. SCC's motion for reconsideration was denied. The Petition: SCC filed a petition for review, arguing that the Court of Appeals erred in finding that SIHI proved its cause of action and in awarding attorney's fees. SCC contended that SIHI's witness was incompetent, lacked personal knowledge, and that the documentary evidence lacked proof of genuineness and authenticity, with original copies not presented.
Issue(s)
Whether the Court of Appeals erred in holding that private respondent SIHI proved its cause of action by preponderant evidence. Whether the Court of Appeals erred in upholding the award of attorney's fees to SIHI.
Ruling
The petition is partly granted. The Court of Appeals' decision is affirmed with modification, deleting the award of attorney's fees.
Ratio Decidendi
On the issue of proving cause of action: The Court held that SCC's reliance on the hearsay rule was misplaced because the right to cross-examine was waived by SCC's repeated failure to appear at scheduled hearings. The Court emphasized that the opportunity to cross-examine negates a claim of hearsay, and such a right can be waived. Furthermore, the Court found that the witness for SIHI was competent and testified to facts within his personal knowledge, satisfying the requirements of Section 36, Rule 130 of the Rules of Court. The Court also deemed the other arguments regarding genuineness of signatures and the best evidence rule moot and academic due to the judicial admission made by SCC during pre-trial regarding the execution of the promissory note and receipt of the demand letter. Such admissions require no further proof under Section 4, Rule 129 of the Rules of Court. The Court cited Article 1159 of the Civil Code, stating that obligations arising from contracts have the force of law between the parties and must be complied with in good faith, and found SCC liable on its obligation. On the issue of attorney's fees: The Court found merit in SCC's argument that the award of attorney's fees should be disallowed because the trial court failed to state the reason for the award. It is settled jurisprudence that the award of attorney's fees is an exception, requiring findings of fact and law to justify it. Since the trial court did not provide any rationale, the award of attorney's fees was deleted.
Main Doctrine
The failure to object to hearsay evidence renders it admissible. The right to cross-examine may be waived by repeated failure to appear during scheduled hearings. A judicial admission made during pre-trial requires no further proof.